Weekly Newsletter
Friday, 19 September, 2008
Property Search | Estate Agents | List your property

Edition 36 of 2008, Friday, 19 September 2008

Dear Reader

The falling of world-wide share prices, fearful lenders and failing of rescue plans from the Fed send trouble companies and investors into ever-deeper holes with the result that expectations for a quick end to the crisis are fading fast. I think it's going to last a lot longer than perhaps we would have anticipated," Anne Mulcahy, chief executive of Xerox Corp., said Wednesday. A plea from the Swiss bank UBS “Stop the insanity,”. The US stock market plunged 4,7% to a three-year low, the dollar slumped and US treasury bonds soared. And the JSE was pushed deeper into a bear market, losing another 2,6% of its value. This indeed is not good news for property owners.

Two articles this week to give us more inside on the International market and what might happen to the property market

  • US Housing Bear Market Nowhere Near a Bottom
  • South Africa: Lehman's Venture Likely to Go Ahead

Rental accommodation is currently in strong demand and landlords are in a strong position – but they should not throw away their advantage. Think long-term, landlords advised

Residential property prices are generally heading into negative terrain, with the numbers set to look worse before they get better. But some owners must still have smiles on their faces, suggests new data released this week. SA's best and worst property performers Investments

Property sellers who have to sell fast in a more difficult market may be tempted to keep quiet about known faults in the property in the hope of attracting more buyers and selling faster. But the best advice to such sellers is: Don’t! The whole truth brings peace of mind

Letter to the editor; I signed an offer to purchase a property last year. The deposit was paid, and bond granted. Now the attorneys contact me to say that the deal has been cancelled, but NO REASON has been given. They are also not responding to my requests for a reason. Send your viewpoint to news@cyberprop.com

The editor


>> Real Estate News - US Housing Bear Market Nowhere Near a Bottom

This week we look at the housing market in some detail. When can we expect it to turn around? Part of the problem is that a new wave of foreclosures is coming due, and this time it is not subprime. And that means more problems for the large financial companies. Also, as predicted here, consumer spending is taking a hit as consumers are finding it increasingly difficult to get credit and a deteriorating labour market is dragging down total spending. There are some very interesting details in the data that was released this week. And we take a quick peek at the outlook for inflation. What is in the pipeline, so to speak? It should make for an interesting letter...

>> South Africa: Lehman's Venture Likely to Go Ahead

JSE-listed property firm Redefine Income Fund and US investment bank Lehman Brothers' property joint venture in Cape Town is likely to continue despite the bank's bankruptcy woes.

Redefine and Lehman entered into a joint venture last year to construct a mixed-use development. The development site, called Annandale, consisted of 70ha in Richmond, about 3km from the mixed-use precinct Century City in Cape Town...

>> Buy-to-let flurry
Rodney Hayter

CAPE TOWN (September18) - The residential rentals market has come in from the wilderness with a bang, according to an article in the latest Pam Golding Properties magazine, Intellectual Property.

It’s a swings and roundabouts situation – a downturn in purchases of houses and apartments and a corresponding upturn in rentals. And now that landlords are beginning to see acceptable letting returns, there is awakened interest in the buy-to-let market...

>> Think long-term, landlords advised

Rental accommodation is currently in strong demand and landlords are in a strong position – but they should not throw away their advantage.

Tjaart van der Walt, CEO of the RealNet property group, says anecdotal evidence is mounting that tenants are showing increasing resistance to rapidly rising rentals and that landlords should carefully consider the benefits of a long-term relationship with reliable tenants...

>> SA's best and worst property performers Investments

Residential property prices are generally heading into negative terrain, with the numbers set to look worse before they get better. But some owners must still have smiles on their faces, suggests new data released this week.

Lightstone Risk Management's latest repeat sales house price index, which is based on Deeds Office data up to the end of May and other sources, shows house prices dropping much more rapidly than in previous months...

>> Buy to let now for a good investment

RESIDENTIAL sales activity among end-user buyers might be flagging countrywide, but the spokesperson for one of South Africa’s real estate brands says interest among buy-to-let investors in touch with demand for rental stock is “visibly rising”.

Speaking from Acutts Estate Agents’ head office in Durban this week, group chairman Pat Acutt identified investor buyers as among the most dominant players in the market place at the moment...

>> First-time buyers need a break - ReMax

A serious review of laws is needed to stimulate the property market and encourage first-time buyers.

This is the view of Jeanne van Jaarsveldt, financial director of ReMax of Southern Africa, who said he would like to see the current threshold on payment of transfer duty to kick in on sales above R1 million. This should be accompanied by meaningful tax breaks for first-time buyers...

>> The whole truth brings peace of mind

Property sellers who have to sell fast in a more difficult market may be tempted to keep quiet about known faults in the property in the hope of attracting more buyers and selling faster.

But the best advice to such sellers is: Don’t...

>> Bang for buck

Homeowners who are considering additions or alterations to make their home more attractive to potential buyers should focus on exterior projects at the moment.

They should, says Institute of Estate Agents national president Willie Marais, spruce up outdoor entertainment areas with decks or patios, paint or recoat exterior walls and, if they want to make structural changes, replace old steel windows with wooden or vinyl ones...

>> Selling in Tough Times – Mark Deavall

I received a phone call yesterday that made me smile with pleasure. Earlier this year, my wife Hilda and I had occasion to buy some household furniture. After shopping around for a few weeks we finally found what we were looking for at House and Home in Eastgate shopping centre.

This call that I received was from the salesman that had dealt with us at House and Home in February. He reintroduced himself, enquired as to my satisfaction with the furniture bought, and then asked if I was in the market for any further furniture or household items...

>> Allowance on residential units revamped

The new Revenue Laws Amendment Bill, issued 1 August 2008, proposes a number of interesting, but fairly complicated amendments to our Income Tax Act. Among them is a proposal to revamp the current section 13ter allowance which applies to residential housing units let out by the taxpayer, or occupied by full-time employees of the taxpayer. Tax Partner at Cameron & Prentice Chartered Accountants, David Warneke, examines the proposal...

>> News from - Green Building Council of South Africa (GBCSA)

Great response to green star SA pilot rating tool

The Green Building Council of South Africa (GBCSA) has received an excellent response to the Green Star SA PILOT rating tool.

“The public comment period closed on 1 September and we have received just over 200 feedback comments from 29 different respondents with comments and suggestions”, says Nicola Douglas, CEO of the GBCSA.

>> Paarl property market active

The Val de Vie estate near Paarl offers residents spectacular views and a tranquil living environment.

The best way to describe the current situation in the Paarl property market is: “What downturn?”

So says Henriette Basson, principal of the local Chas Everitt International franchise, who notes that demand in the Boland town has been sustained and that prices have remained steady, despite the negative market conditions that have affected many other parts of the country...

Focus on Paarl, Western Cape, South Africa

Paarl, a mere 60 kilometers from Cape Town and less than an hour by car from the golden beaches of the Indian and Atlantic Oceans, is renowned not only for its illustrious past and unrivalled scenic beauty, but also presents holiday makers an exciting tourist destination.

Paarl is one of the oldest towns in South Africa and particularly known for its mountain or "Paarl Rock"...

>> View Properties in Paarl
>> View Properties in the Western Cape

>> Property of the week

Western Cape, Paarl

Majestic Villa on 10HA surrounded by vineyards with 180 degree view of Paarl & Drakenstein mountains.

Bedrooms: 4
Bathrooms: 4
Garages 3:

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>> BetterBond's tips to home buyers and sellers

Considerations when applying for a home loan

Feeling very excited about finding your ideal home, you fill in all the required home loan application paperwork and supply all the relevant supporting documentation you are asked to supply – and then the banks reject it. Your excitement quickly turns to disappointment.

In the past, prior to the National Credit Act, banks would calculate what home loan you could afford based on a repayment to income (RTI) of 30% and some major expenses were taken into account. Now you have to provide far more detailed information on your income and expenditure and the banks then look at your available disposable income, the amount that you have left over each month after all your expenses, to see whether you can afford the home loan repayments.

In many instances the home loan application is being declined, but in some cases this can be avoided. Let’s examine some of the reasons why this is happening:

- Gross income is too low. Before you even start looking at properties, you need to know what you can afford to buy. Betterbond can help you establish what amount you qualify for through our website – www.betterbond.co.za or over the phone on toll-free 0800 111 007;

- Payment history. The bank will check to see how well you have paid off your accounts, such as previous and existing loans, car repayments, furniture and clothing accounts. If you have not paid these accounts regularly and on time, this may contribute to the banks turning down your home loan application;

- Credit profile. The banks have a scoring model that takes several characteristics into account, including your current income, how long you’ve worked at your current employer, your marital status, your age, if you have any judgements for not paying accounts, how long it has been since you had the judgement against you and more. The answer is given a score, which is added together to give you a final score. If there is a poor score your application will be turned down;

- Deposit, Transfer fees and Bond Registration costs. You need to ensure you have enough money to pay these costs. The banks have changed their criteria on the maximum amounts they will loan, taking the value of the property into account.

- Property Valuation. The bank will send out an assessor to establish the value of the property you want to buy. If the value is lower than the amount you wish to loan, the application will be declined.

Although the banks may be stricter with their lending criteria, they will not turn away a client that can clearly afford the loan and has a clear credit record. So before you even start looking for a property, make sure you have taken the above factors into account.

Article by: Cheryl Marais, Manager: Direct Marketing, Betterbond

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